Tag Archives: Turkey

Negotiation And Culture

Negotiation is an area of interest for me. It is widely used not only in almost all aspects of business, but also life itself.  I had many experiences involving the art of negotiation as I grew up, as most people in Turkey do, be it with a handyman doing repairs or with the guy who sells oranges at the farmer’s market.  It was not until the negotiations course I took at Wharton, that I started thinking about it as a science as well.  Nowadays I assist some of my consulting clients with their negotiations, and occasionally teach a class on the subject.

Negotiation is hard.  Negotiation with opponents from different cultures is very hard.  Based on my own experience and all the anecdotes I gathered over the years, negotiation with the Chinese is very, very hard.

Robert Cain of Pacific Bridge Pictures is a producer and entertainment industry consultant who has been doing business in China since 1987.  I enjoyed his post How to Deal With Classic Chinese Negotiating Tactics. Cain first summarizes key learnings he drew from an article by attorney Steve Dickinson, then adds his own experience on the subject.

“When faced with the difficulties of language and cultural barriers, we sometimes forget ourselves and allow for tactics and behavior that we would never tolerate in our home territory. Bearing these simple rules in mind can help to reduce the frustration of a prolonged, seemingly unfair negotiation.”

Another great article on negotiating with the Chinese from Harvard Business Review is  The Chinese Negotiation by John Graham and Mark Lam.  Graham and Lam talk about the four threads of Chinese culture that show through in negotiations and how the influence of these threads is present in the eight main Chinese negotiation elements.  The stark contrast between American and Chinese negotiation philosophies and tactics is explained wonderfully with many examples from real life.

“The challenge of mutual understanding is great; American and Chinese approaches often appear incompatible. All too often, Americans see Chinese negotiators as inefficient, indirect, and even dishonest, while the Chinese see American negotiators as aggressive, impersonal, and excitable. Such differences have deep cultural origins. Yet those who know how to navigate these differences can develop thriving, mutually profitable, and satisfying business relationships.”

After reading both articles, I can see once again that Turkey is truly where the East meets the West.  Negotiation in Turkey, just like the rest of the culture, is a mixture of Eastern (Chinese) and Western (American) elements.  An excerpt from the book “Negotiating International Business – The Negotiator’s Reference Guide to 50 Countries Around the World” by Lothar Katz does a pretty good job of explaining how. It is mostly accurate and very entertaining to read. My favorite part?

“Most Turks enjoy bargaining and haggling. They expect to do a lot of it during a negotiation and may be seriously offended if you refuse to play along. The bargaining exchange of negotiation can be very extensive.”

Ah, haggling.  One of our favorite pastimes indeed!


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Cashless Society: Be There or Be Square?

Square caught my attention this summer, when I came across a VentureBeat article called Square credit card readers now being sold at Walgreens, FedEx Office, and Staples.  A credit card reader sold at office supply retailers?

Basically, Square is a payment system where a small, square-shaped reader plugs into your Android, iPhone or iPad’s earphone jack, and allows you to process credit cards, as if you had a POS machine.  The reader is free, after a rebate.  You can choose fixed or flexible pricing, either a flat rate of USD 275 per month, or a variable rate of 2,75% of the charged amount per swipe. Payments taken during business hours usually become available in your bank account the next business day.

Pretty neat, especially when compared to all the hoops a business must jump through to get a POS machine in Turkey.

Generally speaking, a business that wants to obtain a POS machine and the ability to accept credit cards in Turkey, must first fill out an application with a bank and open an account there.  Then come the negotiations, which are not really negotiations but terms dictated by the bank about all the payments the firm has to make to the bank.  Types and amounts of payments vary by bank, common ones are POS machine charge, POS machine setup fee, bank commission rate for the charged amounts (as high as 4%), service fee, loyalty program fee, account processing fee, to name a few.  There are also some penalty fees, if the monthly amount charged through the POS machine is below the quota assigned by the bank.

If there is an agreement, the applicant then must provide the bank with all kinds of documents such as list of authorized signatures, a certificate of good standing with the Chamber of Commerce, copies of the national ID cards of all the partners , a copy of the tax registration certificate,  a certified copy of the article of incorporation and myriad others.  After doing all this, if the applicant is deemed worthy, it is time to sign a bulky agreement with the bank.  My favorite part is where most banks tell you that they cannot give you a copy of the signed agreement, so you have no idea what you just agreed to, and in case you need to look it up in the future, well, tough luck.

Naturally, after comparing the Square to all that hassle just explained above, I thought that it was a pretty good, possibly a disruptive innovation, especially for small businesses and individuals.  It turns out, I was not the only one.  Over the summer, Square signed a deal with Starbucks where customers at participating U.S. Starbucks outlets would be able to pay for products using the Pay with Square app.  Then at the end of August, Square announced a new partnership with AT&T, making Square readers available at 1,000+ AT&T retail stores all over the U.S.

So, Square is doing well in the U.S., but I am more interested in how, if at all, it would work in Turkey.  What does this innovative payment system mean for developing countries like Turkey? Could it become mass market, or would it merely be just another cool gadget, only used by few? Ignacio Mas of CGAP, an independent policy and research center dedicated to advancing financial access for the world’s poor, housed at the World Bank, talks about it in Are Lower-End Shops Ripe for Electronic Payments?.

“In developing countries, … most people do not have a preference for electronic payments, and the installed base of cards and smart devices is still low. The former is by far the bigger obstacle. The majority of people in developing countries who have an electronic account do don’t have much value stored in them, and many more don’t even have an account. It’s hard to create a preference for paying in a currency you don’t have. In this situation, only merchants that tend to serve the richer banked elites will see a reason for accepting electronic payments (and, more significantly, the merchant discounts that come with that). Accordingly, we’ll observe the usual slow progression down-market.”

CGAP’s analysis rings true.  In developing countries like Turkey, cash will continue to be king for a long, long time. Visions of a cashless society come up more and more often in business circles these days.  The cashless society idea, where everyone uses a credit card, debit card, NFC or a gadget like Square instead of cash, sounds cool and may work in a country like Sweden, but around here it is nothing but a pipe dream, at least for the near future.

Sure, credit card usage has grown at an impressive rate in Turkey over the past few years. But a significant number of credit card owners are “revolvers“, people who use the credit card to buy things they otherwise would not be able to afford, as a substitute for a loan, if you will, instead of “transactors“, who simply use the credit card as a convenient payment tool. If you include transactors using the “installments” method of payments, a phenomenon unique to Turkey, number of revolvers becomes even more significant.  So, the large number of credit card users does not necessarily mean that people prefer credit cards and are willing to abandon cash.  It just means that they enjoy spending money they do not actually have, even if the cost of doing so is high.

With its huge underground economy, uneducated customer base, low level of trust in financial institutions and a widespread habit of tax evasion, I do not foresee electronic payments winning over cash in Turkey anytime soon.  Anybody who tells you different is trying to sell you something.

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Change Is Never Easy

Earlier, in The “Odd New Thing”: Social Media, we touched upon how executives treat social media as the something they do not really understand but feel the need to be part of.  And in Social Media Teams we discussed changes brought to the organization structure and the inner workings of a corporation by social media.

What is true for social media in particular is also true for new technologies and digital in general:  New, innovative ways of doing business force companies to undergo drastic changes in organizational structure, uses of technology, measures of success and resource allocation.  More than merely the way of doing business, the business mentality itself is becoming more customer-centric, more adaptive and less tolerant to mistakes.

Based on my observations of executives in Turkey, especially those of traditional companies, most react to these changes in one of the two extremes: apathy or obsession.  Some consider these changes to be something to be managed in a vacuum, to be handled by others, either someone within the organization or by an external consultant.  They do not really want to be involved, and as long as there are no problems, and it does not crowd their space, it is all good.

Others get really excited about all this transformation and want to become a part of it.  They spend a lot of unnecessary time and energy at the expense of other areas, driving their teams and colleagues crazy. Even though they do not understand the underlying strategy or the methods all that well, they want to “do it” anyway, albeit in a manic manner.

Martin Gill, an eBusiness and Channel Strategy Analyst at Forrester Research, talks about similar difficulties faced by eBusiness managers in Shooting Arrows At Eagles:

“Some visionary companies Burberry, Marks and Spencer are lucky enough to have CEOs who grasp the power of digital. These companies are embedding digital into every aspect of their operations and are collapsing the walls between “eBusiness” and the traditional store or branch chains.

But most organizations aren’t so well positioned. Many eBusiness leaders have a vision for agile commerce that isn’t shared or even understood by their senior management and are now finding that their primary mission is to drive transformational change across their companies from within their area of accountability — selling the vision upwards, sideways, and downwards and positioning themselves as cross-functional leaders.

This takes vision, great communication skills, and the courage of their convictions much like our pacifist revolutionaries. Change driven not from the top, but from small seeds.”

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Amazon Lockers

I found out about Amazon‘s recent innovation, Amazon Lockers, when I came across Wall Street Journal’s article on the subject:

“The Web giant has quietly installed large metal cabinets—or Amazon Lockers—in grocery, convenience and drugstore outlets that function like virtual doormen, accepting packages for customers for a later pickup. Amazon began putting lockers in Seattle, New York state and near Washington, D.C., about a year ago.

And the company is now ramping up the service. In the past few weeks, Amazon has opened its first lockers sites in the San Francisco Bay area.

By adding the lockers, Amazon is addressing the concerns of some urban apartment dwellers who fear they’ll miss a delivery or have their items stolen from their doorstep.”

It piqued my interest, and I read more about it on Braden Kelley’s post Amazon Delivers Innovation on InnovationExcellence:

“This is a great potential innovation for the segment of their customer base that has trouble receiving their packages – either because they live in an apartment or condo that is difficult to deliver to, aren’t home to sign, or because they are worried that their package might be stolen.

But the motive for the experiment is not purely an altruistic customer service one, companies like Amazon pay up to 20% more to have packages delivered to a residence. So, delivering a package to a locker helps Amazon save money too – helping to offset the costs of installing and maintaining the lockers. And as a bonus they serve as OOH (Out Of Home) advertisements in a context where people’s minds are already open to buying things.”

My first thought was “what a great idea.” My second thought was whether this innovation would work in Turkey. I decided that it would not make a whole lot of sense in a larger scale.

  • Most parcels are delivered by private cargo carriers, requiring a signature and a photo ID at the point of delivery.  Leaving packages on the doorstep is not common.
  • Most of the apartment buildings in the cities have doormen who pick up packages for residents who are not present at the time of the delivery. My doorman called me on my mobile just the other day when I was at the office to ask me whether he should accept a package for me.
  • Cargo carriers have many local offices which serve as lockers anyway.  If you miss a delivery, you can pick it up at the local cargo carrier office for the next few days.
  • Locker security would be a problem, I would estimate that insurance rates would be quite high, driving up the delivery price.
  • Locker space rent would be high at secure locations such as shopping malls.

So kudos to Amazon for addressing a problem in the U.S. with an innovative approach but a good idea in one place does not necessarily work in another.  One more example of how innovation is unique to market conditions – one cannot simply copy it and expect it to work.

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The “Odd New Thing”: Social Media

I see many Turkish executives (although I have a hunch that they are not alone) treat social media as the “odd new thing” they do not really understand but feel the need to be part of.  We have been through this at least once before, when the Internet Revolution came to be.  Most executives were excited but they were also afraid, because they did not know how to go about incorporating the Internet into their business.  So most of them went out, grabbed a recent, tech-savvy college graduate, and if anyone asked they said they were taking care of the “internet minternet*” business of their organization.  Nowadays, history sort of repeats itself and we see a bunch of young people who have cool titles such as “Social Media Specialist” or “Social Media Strategist” showing up at local firms to take care of the “social media” business of the organization.

Same as the Internet, social media is part of a whole, not the “odd new thing” that can be spun off and managed independently.  Just as we cannot separate Internet from the various aspects of our business today, we cannot really think of social media independent of a coherent Marketing or Brand Strategy.  Sure, one cannot successfully manage a marketing function if one does not understand the tools, but without a high level vision and understanding of the overall communication strategy, a tool such as social media is not a tool, but a toy.

Hollis Thomases, in her controversial article 11 Reasons a 23-Year-Old Shouldn’t Run Your Social Media, lists reasons why the easy way to handle social media may not be the best way.

“Just because you don’t understand social media doesn’t mean you should forfeit all common sense and hire your niece, nephew, or any other recent college grad (say, your best friend’s sister-in-law’s kid) because “they’re really good on Facebook.”

* “Internet minternet” is a Turkish phrase which means “Internet, et cetera.”

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Distimo’s “Most Popular Social Networking Apps” Study Or How NOT To Display Data

Distimo, a private company based in Utrecht, The Netherlands, provides app store monitoring tools for developers, as well as app store market reports for device manufacturers and carriers.  They also publish a monthly report on the app store market. You can access the latest report here.

In that report, also discussed in a Techcrunch article, I came across the graph below that shows the most popular social networking apps between July 2010-June 2011.

This is a GREAT example how graphics like this floating all over the internet can be greatly misleading. Here are the reasons:

  1. The data is for DOWNLOADS, NOT USERS. Something like “popularity” is so vague, it can mean anything from downloads, to total users, to new users, to users who gave it a score of higher than 4 out of a possible 5, etc.  Also, an app like Facebook, which has been around for a while, is expected to have diminishing numbers of downloads over time. To compare it with NEWER apps is meaningless. Just because I downloaded something last year does not mean I am not still using it! And just because I downloaded something does not mean I am using it at all, PERIOD!
  2. The data is for iPhone apps ONLY, ignoring the many other types of mobile devices out there. Plus, a lot of people still use non-mobile devices (including yours truly) to access their Facebook accounts.  A Facebook announcement earlier this year claimed 845 million monthly active users including 425 million users who access the service on mobile devices. Of course, this does not mean that 425 million people use their mobile devices ONLY, and the remaining 420 million people use their desktops and laptops. The 425 million most likely use both mobile AND non-mobile devices.  To use iPhone downloads as representative of overall popularity is ludicrous!
  3. Last, but no the least, country selection. Wherever a country is marked in black on the world map means THERE IS NO DATA for that country. Really? Hailing from Turkey, the SEVENTH largest country in terms of Facebook users, according to Socialbakers numbers for the last six months, I find that very hard to believe.

Sitting in my office in Istanbul, which, by the way, according to Socialbakers, is the THIRD largest city in the world in terms of Facebook users, I am shaking my head at Distimo, and its extremely careless interpretation and presentation of data.

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How To Make The Best Of Opt-In

I have always thought that customer relationship management (CRM) of Turkish companies in general was a bit lackluster. Contrary to what most corporations think, customer relationship management is more than just keeping customer records in a database. After collecting good customer data, it must be successfully mined, analyzed and used in creative ways to increase customer profitability without pissing people off.

Unfortunately, most Turkish companies merely treat CRM as a tool that allows them to carpet bomb messages to customers in various media, mobile SMS being the most popular, rather than deliver surgical strikes. And thanks to slow progress in the legal field, most of them got away with it without significant penalties so far. To prevent the erosion of goodwill, as well as to spend marketing budgets more efficiently, Turkish companies need to get more serious about opt-in to realize the benefits.

My colleague from our Mitchell Madison Group years, Derek Martin, currently Sales Director at Velti, talks about how to use opt-in to get the right message in front of the right customer while increasing customer value in Getting Past Opt-In.

“By actively cultivating and managing opt-in lists, companies can continue to develop and enrich relationships with customers and foster trust and openness. In a customer-empowered relationship, these traits can make the difference between success and failure.”

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